GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS

The following are our goodwill and net identifiable intangible asset balances as of the dates indicated:



	March 31, 2016		September 30, 2015
	(in thousands)
Goodwill	$	313,005	$	307,635
Identifiable intangible assets, net	63,959		69,327
Total goodwill and identifiable intangible assets, net	$	376,964	$	376,962

Our goodwill and identified intangible assets result from various acquisitions. As more fully described in Note 3, in April 2015 we completed our acquisition of Cougar which included a number of identifiable intangible assets. See Note 13 on pages 152 - 155 of our 2015 Form 10-K for a discussion of the components of our goodwill balance and additional information regarding our identifiable intangible assets which arose from acquisitions completed in prior years. See the discussion of our intangible assets and goodwill accounting policies in Note 2 on pages 116 - 117 of our 2015 Form 10-K.

Goodwill

The following summarizes our goodwill by segment, along with the activity, as of the dates indicated:



	Three months ended March 31,						Six months ended March 31,
	Segment						Segment
	Private client group		Capital markets		Total		Private client group		Capital markets		Total
	(in thousands)
Fiscal year 2016
Goodwill as of beginning of period	$	186,733	$	120,902	$	307,635	$	186,733	$	120,902	$	307,635
Foreign currency translation	2,622		2,748		5,370		2,622		2,748		5,370
Impairment losses	—		—		—		—		—		—
Goodwill as of end of period	$	189,355	$	123,650	$	313,005	$	189,355	$	123,650	$	313,005

Fiscal year 2015
Goodwill as of beginning of period	$	174,584	$	120,902	$	295,486	$	174,584	$	120,902	$	295,486
Impairment losses	—		—		—		—		—		—
Goodwill as of end of period	$	174,584	$	120,902	$	295,486	$	174,584	$	120,902	$	295,486

We performed our annual goodwill impairment testing during the quarter ended March 31, 2016, evaluating the balances as of December 31, 2015. We assign goodwill to reporting units. Our reporting units include a Private Client Group reporting unit comprised of our RJ&A domestic retail brokerage operations and TPC (included in our Private Client Group segment), RJ&A Fixed Income (included in our Capital Markets segment) and RJ&A Equity Capital Markets (included in our Capital Markets segment). In addition, we have two RJ Ltd. reporting units (RJ Ltd. Private Client Group (included in our Private Client Group segment) and RJ Ltd. Capital Markets (included in our Capital Markets segment)), each associated with our Canadian operations, and we elected to perform a quantitative assessment for each of the Canadian reporting units.

Qualitative Assessments

For each reporting unit that we performed qualitative assessments on, we determined whether it is more likely than not that the carrying value of the reporting unit, including the recorded goodwill, is in excess of the fair value of the reporting unit. In any instance in which we are unable to qualitatively conclude that it is more likely than not that the fair value of the reporting unit exceeds the reporting unit carrying value including goodwill, a quantitative analysis of the fair value of the reporting unit would be performed. Based upon the outcome of our qualitative assessments, we determined that no quantitative analysis of the fair value of any of the reporting units we elected to qualitatively analyze as of December 31, 2015 was required, and we concluded that none of the goodwill allocated to any of those reporting units as of December 31, 2015 was impaired. No events have occurred since December 31, 2015 that would cause us to update this impairment testing.

Quantitative Assessments

For our two RJ Ltd. reporting units, we elected not to perform a qualitative assessment but instead to perform quantitative assessments of the equity value of each RJ Ltd. reporting unit that includes an allocation of goodwill. In our determination of the reporting unit fair value of equity, we used a combination of the income approach and the market approach. Under the income approach, we used discounted cash flow models applied to each respective reporting unit. Under the market approach, we calculated an estimated fair value based on a combination of multiples of earnings of guideline companies in the brokerage and capital markets industry that are publicly traded on organized exchanges, and the book value of comparable transactions. The estimated fair value of the equity of the reporting unit resulting from each of these valuation approaches was dependent upon the estimates of future business unit revenues and costs, such estimates were subject to critical assumptions regarding the nature and health of financial markets in future years as well as the discount rate to apply to the projected future cash flows. In estimating future cash flows, a balance sheet as of the December 31, 2015 impairment test date and a statement of operations for the last twelve months of activity for each reporting unit were compiled. Future balance sheets and statements of operations were then projected, and estimated future cash flows were determined by the combination of these projections. The cash flows were discounted at the reporting units estimated cost of equity which was derived through application of the capital asset pricing model. The valuation result from the market approach was dependent upon the selection of the comparable guideline companies and transactions and the earnings multiple applied to each respective reporting units’ projected earnings. Finally, significant management judgment was applied in determining the weight assigned to the outcome of the market approach and the income approach, which resulted in one single estimate of the fair value of the equity of the reporting unit.

The following summarizes certain key assumptions utilized in our quantitative analysis as of December 31, 2015:



				Key assumptions
							Weight assigned to the outcome of:
Segment	Reporting unit	Goodwill as of the impairment testing date (in thousands)		Discount rate used in the income approach		Multiple applied to revenue/EPS in the market approach	Income approach		Market approach
Private client group:	RJ Ltd. Private Client Group	$	16,144	14	%	1.2x/12.4x	75	%	25	%

Capital markets:	RJ Ltd. Capital Markets	16,893		15	%	1.1x/14.4x	75	%	25	%
Total		$	33,037

The assumptions and estimates utilized in determining the fair value of reporting unit equity are sensitive to changes, including, but not limited to, a decline in overall market conditions, adverse business trends and changes in the regulations.

Based upon the outcome of our quantitative assessments as of December 31, 2015, we concluded that none of the goodwill associated with our two RJ Ltd. reporting units was impaired.

No events have occurred since December 31, 2015 that would cause us to update this impairment testing.

Identifiable intangible assets, net

The following table sets forth our identifiable intangible asset balances by segment, net of accumulated amortization, and activity for the periods indicated:



	Segment
	Private client group			Capital markets			Asset management			RJ Bank			Total
	(in thousands)
For the three months ended March 31, 2016
Net identifiable intangible assets as of beginning of period	$	17,799		$	31,211		$	16,301		$	1,461		$	66,772
Additions	—			—			—			87			87
Amortization expense	(384		)	(1,319		)	(565		)	(95		)	(2,363		)
Foreign currency translation	—			—			(537		)	—			(537		)
Impairment losses	—			—			—			—			—
Net identifiable intangible assets as of end of period	$	17,415		$	29,892		$	15,199		$	1,453		$	63,959

For the six months ended March 31, 2016
Net identifiable intangible assets as of beginning of period	$	18,182		$	32,532		$	17,137		$	1,476		$	69,327
Additions	—			—			—			160			160
Amortization expense	(767		)	(2,640		)	(1,181		)	(183		)	(4,771		)
Foreign currency translation	—			—			(537		)	—			(537		)
Impairment losses	—			—			—			—			—
Other	—			—			(220		)	—			(220		)
Net identifiable intangible assets as of end of period	$	17,415		$	29,892		$	15,199		$	1,453		$	63,959

For the three months ended March 31, 2015
Net identifiable intangible assets as of beginning of period	$	8,472		$	36,600		$	10,663		$	1,253		$	56,988
Additions	—			—			—			118			118
Amortization expense	(139		)	(1,375		)	(333		)	(72		)	(1,919		)
Impairment losses	—			—			—			—			—
Net identifiable intangible assets as of end of period	$	8,333		$	35,225		$	10,330		$	1,299		$	55,187

For the six months ended March 31, 2015
Net identifiable intangible assets as of beginning of period	$	8,611		$	37,975		$	10,996		$	1,193		$	58,775
Additions	—			—			—			233			233
Amortization expense	(278		)	(2,750		)	(666		)	(127		)	(3,821		)
Impairment losses	—			—			—			—			—
Net identifiable intangible assets as of end of period	$	8,333		$	35,225		$	10,330		$	1,299		$	55,187

Identifiable intangible assets by type are presented below:



	March 31, 2016					September 30, 2015
	Gross carrying value		Accumulated amortization			Gross carrying value		Accumulated amortization
	(in thousands)
Customer relationships	$	73,770	$	(19,545	)	$	75,217	$	(17,759	)
Trade name	3,928		(267		)	4,278		(111		)
Developed technology	12,630		(9,017		)	12,630		(7,754		)
Intellectual property	521		(48		)	561		(23		)
Non-compete agreements	987		(453		)	1,018		(206		)
Mortgage servicing rights	2,227		(774		)	2,067		(591		)
Total	$	94,063	$	(30,104	)	$	95,771	$	(26,444	)